If you buy the foreclosure of a junior lien (ex HOA fees or 2nd mortgage), then a senior lien (ex 1st mortgage/note) will survive the foreclosure, and still be attached to the property.Yes, I'm sure the lender would love for you to pay it off. 

We would otherwise be paying ~$20k/unit per year in cleaning fees. - Downtown location, near restaurants and a 3 min walk to train station- Only 2 off street parking spots, street is permit parking only but there is free parking down the street- Units have just been completely renovated- The city does not have any ordinances against short term rentalsThe biggest hurdles for me are: we're about to go into a slump/down season; potential parking issues; and if one of the other units were rented long term - dealing with the hassles related to that.

Rates are a factor as well as income and assets.

>You seem to think that income isn't a factor for appraisal or value.Correct when less than 5 units.

I believe there are many factors that would indicate which one is better in your market of choice.

However, rate would be prime + index + an additional +2% for the shock factor just to qualify, but you can draw the funds whenever you want and just pay the balance + interest vs cash out where you have to draw all the money after closing. 

This criteria is for 1-4 and 5-8 unit programs.I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23DSCR lenders generally let you vest either individually or as an LLC.

Include not only the mortgage payment but also taxes, insurance, property management fees (if applicable), maintenance costs, vacancy allowance, and any planned capital improvements.

The requirements to become an Agent (although not difficult) does take some time and then there is a multitude of fees to pay once you join an RE office. 

However, if the $4k/month also includes utilities and other maintenance (i.e. gardening, pool service, etc.) then you'll have to factor that in as well.